The accountancy industry has had another successful year. While the big four firms face increased public scrutiny and possible legislative reform, the industry’s health remains robust with good levels of growth overall and among the different services offered by firms.
Accountancy practices are expanding their services beyond traditional audit/accounting. As accountants diversify their offerings, many firms are growing services that help to complement their audit department. Despite this, audit remains the single largest fee earner for most accounting firms.
Based on the results of this year’s Top 50+50 Ranking survey, which we ran in partnership with Silverfin, the top 100 accountancy firms on average grew their yearly fee income by 7.4% with the median firm earning £14.73 million. This took earnings well past the £16bn mark for the top 100 firms. Earnings surpassed the Only 12% reported a year on year decrease in fees earned – and many of those were due to areas of business being stripped out.
So where are firms experiencing growth? Here are some interesting takeaways form the ranking survey:
- Tax fee grew by 9% this year, with the median firm earning £5 million.
- Consultancy is dominated by a few big players as demonstrated by the fact the average income earned is £21 million compared to a median of £6 million.
- Corporate finance also saw major growth, growing nearly 14% this year. But like consultancy it is dominated by the larger firms.
- Corporate finance earnings vary greatly between firms. With some firms reporting high double-digit growth while others report shrinkage of the same magnitude.
- Payroll also saw major growth, where the service grew by more than 10%. While payroll fees are considerably less than other services, it is a service that is offered by many of the medium and smaller sized accountancy firms.
- Despite pushes to diversify away from auditing, revenues grew by 6.9%
- The biggest growth in auditing came from small- and medium-sized firms, 18 of which reported more than 10% growth
Despite economic uncertainty and an overall sluggish economy, the accountancy sector in the UK remains a relatively high growth sector. However, as the economies in the EU bloc continue to sputter and the US-China trade dispute exacts its toll on the global economy, accountancy may soon also see its own slowdown. This is before even mentioning continued Brexit uncertainty, on what it will look like, and when it may happen.
However, based on our survey results and optimism shared in the survey, the outlook is positive for the sector. Indeed, firms are mostly positive in their position one year from now. Two-thirds of firms who responded to our 50+50 ranking survey are expecting growth to be higher next year and more than half (57%) expect to add new partners to their practice.
We discussed the findings and key learnings of the Top 50+50 Ranking in a recent webinar. Register here to listen to the webinar on demand.